This from the FT highlights the direction of P2P lending is closing in on the direction set in Canada in 2008.

His frustration stems from the consultation paper published just over a week ago by the Financial Conduct Authority, which proposed placing the same restrictions on peer-to-peer lenders that already apply to high-risk platforms, such as equity crowdfunding sites.

This would mean that to invest in peer-to-peer loans, investors would in future have to be certified as sophisticated, be very wealthy, be advised by an authorised person, or certify they will not invest more than 10 per cent of their net assets.

Basically the direction says that P2P cannot be made available to regular people becase they are not capable of evaluating the risk due to their inexperience with investing.

i would never challenge that direction. I would challenge that “sophisticated” investors are capable. Credit risk judgement is a science and not something easily learned.

Alternatively the regulators are suggesting that sophisticated investors are sufficiently well diversified in their investments that they can absorb the risk of P2P Loans going to zero. If that is the case why do the regulators not require a diversifcatoin policy for sophisticated investors? Once you start this type of prescritoive regulation it never ends.

if the final answer is that “sophisticated” investors are sufficiently wealthy to absorb any portfolio loss, that is a fair point. However it suggests that “non-sophisticated” investors should be restricted not just from P2P, from many other investment types, such as real estate, film, etc.

It is not a convincing argument to restrict P2P.

]]>Colin HendersonFinally someone in the community acknowledges Blockchain challenge for Bankshttps://thebankwatch.com/2018/06/14/finally-someone-in-the-community-acknowledges-blockchain-challenge-for-banks/
Fri, 15 Jun 2018 00:13:09 +0000http://thebankwatch.com/2018/06/14/finally-someone-in-the-community-acknowledges-blockchain-challenge-for-banks/I have done a fair bit of research on Blockchain technologies as an alternative to SWIFT and that is really what we are talking about when it comes to international payments. This story caught my attention.

NEW YORK (Reuters) – Banks are unlikely to use distributed ledgers to process cross-border payments for now because of scalability and privacy issues, according to Ripple, one of the most prominent startups developing the technology

If we look at SWIFT it is no more than a messaging system that is accepted by banks to trust each other a payment has been made and to go ahead and debit/ credit each other using their nostro/ vostro accounts. No money changes hands with SWIFT. That clearing is old school using basically bank accounts that each bank hold with each other amongst the community of Banks who have together agreed to trust each other. Don’t get me wrong, SWIFT handles it well, but it is a messaging system.

What is Blockchain in this context then: it is a messaging system. It is the ability to provide a shared online record of messages that would disintermediate SWIFT. Always good to have competition and propose new more efficient or cheaper alternatives.

Blockchain is currently:

Heavy and resource dependent

Slow

Lacks any method to provide financial clearing

On the third point, Ripple are giving it the old college try and more than anyone else. Other Blockchain applications are dependent on moving your money into bitcoin and moving that coin through a vendors bank account. Yes international transfers still need money to move, and archaic as banking is this is a truism. Show me the money in my account.

There is something there with Blockchain but to me it remains a solution looking for a problem, particularly in a Banking context.

]]>Colin HendersonFaceBook challenges run deep and are fundamentalhttps://thebankwatch.com/2018/04/05/facebook-challenges-run-deep-and-are-fundamental-2/
Fri, 06 Apr 2018 04:34:00 +0000http://thebankwatch.com/?p=6008Back in 2007, then in 2016 I looked at the FaceBook business model and compared it to AOL.

Here is the thing. AOL which was the US #1 internet source at one point, lost out because its mission was to retain users within the walled garden. It is not the first time this argument has been used but consider …. AOL strategy was all about building tools within their own garden, and as early as the 1990’s they even had their own browser and their own markup language (think proprietary version of HTML). They had their own CD which let you install AOL on your computer. The AOL ‘platform’ was a CD. Platform, tools, apps; the parallels are remarkably close.

My context then seems narrow now. But FaceBook remains a walled garden which expects to attract users and is required to continually provide reasons to be attractive to users, and yet make money.

The attraction FaceBook provided was to challenge traditional views on privacy and imply that they had that covered. Zuckerberg continually challenged traditional views on privacy and was rewarded with 2 Bn users.

Fast forward to now, and the walls are tumbling. Sandberg comments today tell us Mark will no longer be at the helm in short order.

Relevance to Bankwatch:

I have always been critical of internet and web as a media tool. I remain steadfast on that. I believe in pay as you go subscription models for news. I know who I trust and I know who I mistrust.

Facebook has no attraction for me as media. I understand the attraction of my relatives sharing family pics but I do not understand the relevance for news.

I know and trust Lionel Barber, Rana Foroohar and Gillian Tett (look them up). They carry weight and credibility. That is what distinguishes actual news.

Meantime FaceBook has been attracting users beyond the friends and family people based on spurious information that is not even called news. Those people were attracted under false pretences. Sandberg noted today that “To this day, we still don’t know what data Cambridge Analytica have”

Finally this from 2009 from 2009 where I summarised the coming media crisis using pieces from several others.

In 2004 people were asking about blog business models. Now it is social network business models. I have suggested other ways to deal with business models, but the mob continues to aim directly at advertising as the answer. It will pollute the web, and result in the opposite result than what is desired. It will not bring sustainability for them using advertising.

This weekend a major change in the way banks manage your data takes place, one that could completely revolutionise how we bank, who owns our financial data and which companies can offer us targeted financial services.

It’s called Open Banking and it’s driven by a new EU directive and new UK competition rules. Changes taking effect this weekend mean that banks will have to share financial data such as transaction history and spending patterns with other (regulated) third-party providers if the account holder requests it.

That might sound like baffling small print, but it could genuinely shake up the way in which you manage your money.

Instead of your personal data being something jealously guarded by your bank, you’ll be able to request that approved companies can also access it. That will mean they can help you analyse and improve your spending habits or simply just point you at financial services that better meet your needs.

“The research shows that when we use social media to connect with people we care about, it can be good for our well-being. We can feel more connected and less lonely, and that correlates with long term measures of happiness and health. On the other hand, passively reading articles or watching videos even if they’re entertaining or informative may not be as good. Based on this, we’re making a major change to how we build Facebook. I’m changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions”.

]]>Colin HendersonTest Post 3 – finalhttps://thebankwatch.com/2017/11/27/test-post-3-final/
Mon, 27 Nov 2017 05:28:23 +0000http://bankwatch.wordpress.com/?p=5994I have had the hardest time locating a blog tool for Mac. it has been a struggle for 5 years. This is my latest try. it has potential. Cannot paste pics but able to use insert.
]]>Colin HendersonTest post 2https://thebankwatch.com/2017/11/26/test-post-2-2/
Mon, 27 Nov 2017 04:40:34 +0000http://bankwatch.wordpress.com/?p=5990

]]>Colin HendersonDeutsche admits defeat on retaining large traditional branch networkhttps://thebankwatch.com/2017/03/06/deutsche-admits-defeat-on-retaining-large-traditional-branch-network/
Tue, 07 Mar 2017 04:54:21 +0000http://bankwatch.wordpress.com/?p=5979The turnaround from just yesterday from Deutsche is telling. One day they were to sell Postbank and today that idea is gone. In 2007 Postbank adherence to the branch concept was clear. No more.

Deutsche Bank has abandoned plans to sell its consumer banking unit Postbank and will instead embark on a massive integration project, rationalising technology platforms and running up a EUR1 bill on restructuring and severance costs.

The combined bank will serve over 20 million customers in Europe’s largest economy, 10 million of which are already using digital offerings.

Today the shift away from branches that began with Barclays and other UK banks 8 years ago has finally taken hold. The idea of a large bank being branchless is no longer a dream. There are many banks using the concept of shift to sales offices as a teaser, but the reality is that the traditional $1 million + branch with tellers, cash and vault infrastructure is now defunct.

In 2006 Jim Bruene, founder of Online Banking Report wrote this report. It has indeed been a long time coming but it is happening now.

]]>Colin HendersonInternational agreements which guarantee certain economic minima to the world population – 1964 Randhttps://thebankwatch.com/2017/01/21/international-agreements-which-guarantee-certain-economic-minima-to-the-world-population-1964-rand/
Sat, 21 Jan 2017 05:40:08 +0000http://bankwatch.wordpress.com/?p=5972Ben Evans has a post entitled “Asking the wrong questions” looks back at predictions from Rand. In particular a report from 1964 has several predictions, but this one, off the radar, caught my eye on the inaguration of Donald Trump.

I am not going political here. Just looking at facts. Rand predicted automation would result in economic disparity and assumed we would be smart enough to work together to ensure people would not suffer as a result.

Is this not the populist message?

]]>Colin Henderson“We are, in the simplest terms, a subscription-first business” NY Timeshttps://thebankwatch.com/2017/01/19/we-are-in-the-simplest-terms-a-subscription-first-business-ny-times/
Fri, 20 Jan 2017 03:43:40 +0000http://bankwatch.wordpress.com/?p=5969With that statement the NY Times in a 2020 strategy statement prove they at least understand that the days of newspaper survival on advertising are gone.

The final paragraph in the introduction has three telling actions still required:

For The Times to become an even more attractive destination to readers — and to maintain and strengthen its position in the years ahead — three broad areas of change are necessary. Our report must change. Our staff must change. And the way we work must change.

I still believe in (online) newspaper organisations with quality reporters for obtaining real news, but it is a small group that I rely on, and maybe NY Times are going to make it. (others are Financial Times, Economist)

]]>Colin HendersonFacebook fake news is not newhttps://thebankwatch.com/2016/11/21/facebook-fake-news-is-not-new/
https://thebankwatch.com/2016/11/21/facebook-fake-news-is-not-new/#commentsMon, 21 Nov 2016 06:33:59 +0000http://bankwatch.wordpress.com/?p=5967This is the thin edge of the wedge that goes way deeper.

Back in 2006 the Walmart fake marketing situation erupted. The basic theme goes back to the “on the internet nobody knows you are a dog”. You can say anything with conviction and supposed analysis and it must be true because it is there on the internet.

Now there is an even deeper school of thought that this is not new, and that marketing has always been this way.

However the adoption of technology with the complete absorption by a whole new demographic means fake news becomes real news. We have a rapid ignoring of MSM by all generations.

However I am not sure that it is any worse than it has ever been with biased opinion-ed comments in MSM. But Facebook is more pervasive and visible, and all problems point to Mark. That does make this a new problem.

Now, having said all that the talking points that Mark outlines below are frankly useless. For example the reference to fact checking is just that … a reference.

I publish this blog and I post periodically, much less than before due to actual work matters but it is here and it is me. The people who read my blog have some interest in banking technology. Whereas Facebook et al have the problem of talking to everyone with varied interests.

This is an extreme comparison but it highlights the problem Facebook faces. It is possible to become so large that you influence such a large group which was never expected. How do you manage that.

__________

Mark ZuckerbergNovember 19 at 1:15am ·A lot of you have asked what we’re doing about misinformation, so I wanted to give an update.The bottom line is: we take misinformation seriously. Our goal is to connect people with the stories they find most meaningful, and we know people want accurate information. We’ve been working on this problem for a long time and we take this responsibility seriously. We’ve made significant progress, but there is more work to be done.Historically, we have relied on our community to help us understand what is fake and what is not. Anyone on Facebook can report any link as false, and we use signals from those reports along with a number of others — like people sharing links to myth-busting sites such as Snopes — to understand which stories we can confidently classify as misinformation. Similar to clickbait, spam and scams, we penalize this content in News Feed so it’s much less likely to spread.The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.While the percentage of misinformation is relatively small, we have much more work ahead on our roadmap. Normally we wouldn’t share specifics about our work in progress, but given the importance of these issues and the amount of interest in this topic, I want to outline some of the projects we already have underway:– Stronger detection. The most important thing we can do is improve our ability to classify misinformation. This means better technical systems to detect what people will flag as false before they do it themselves.– Easy reporting. Making it much easier for people to report stories as fake will help us catch more misinformation faster.– Third party verification. There are many respected fact checking organizations and, while we have reached out to some, we plan to learn from many more.– Warnings. We are exploring labeling stories that have been flagged as false by third parties or our community, and showing warnings when people read or share them.– Related articles quality. We are raising the bar for stories that appear in related articles under links in News Feed.– Disrupting fake news economics. A lot of misinformation is driven by financially motivated spam. We’re looking into disrupting the economics with ads policies like the one we announced earlier this week, and better ad farm detection.– Listening. We will continue to work with journalists and others in the news industry to get their input, in particular, to better understand their fact checking systems and learn from them.Some of these ideas will work well, and some will not. But I want you to know that we have always taken this seriously, we understand how important the issue is for our community and we are committed to getting this right.A lot of you have asked what we’re doing about misinformation, so I wanted to give an update.The bottom line is: we take misinformation seriously. Our goal is to connect people with the stories they find most meaningful, and we know people want accurate information. We’ve been working on this problem for a long time and we take this responsibility seriously. We’ve made significant progress, but there is more work to be done.Historically, we have relied on our community to help us understand what is fake and what is not. Anyone on Facebook can report any link as false, and we use signals from those reports along with a number of others — like people sharing links to myth-busting sites such as Snopes — to understand which stories we can confidently classify as misinformation. Similar to clickbait, spam and scams, we penalize this content in News Feed so it’s much less likely to spread.The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.While the percentage of misinformation is relatively small, we have much more work ahead on our roadmap. Normally we wouldn’t share specifics about our work in progress, but given the importance of these issues and the amount of interest in this topic, I want to outline some of the projects we already have underway:– Stronger detection. The most important thing we can do is improve our ability to classify misinformation. This means better technical systems to detect what people will flag as false before they do it themselves.– Easy reporting. Making it much easier for people to report stories as fake will help us catch more misinformation faster.– Third party verification. There are many respected fact checking organizations and, while we have reached out to some, we plan to learn from many more.– Warnings. We are exploring labeling stories that have been flagged as false by third parties or our community, and showing warnings when people read or share them.– Related articles quality. We are raising the bar for stories that appear in related articles under links in News Feed.– Disrupting fake news economics. A lot of misinformation is driven by financially motivated spam. We’re looking into disrupting the economics with ads policies like the one we announced earlier this week, and better ad farm detection.– Listening. We will continue to work with journalists and others in the news industry to get their input, in particular, to better understand their fact checking systems and learn from them.Some of these ideas will work well, and some will not. But I want you to know that we have always taken this seriously, we understand how important the issue is for our community and we are committed to getting this right.

]]>Colin Henderson20 years of online bankinghttps://thebankwatch.com/2016/10/16/20-years-of-online-banking/
Mon, 17 Oct 2016 03:56:40 +0000http://bankwatch.wordpress.com/?p=5950Just a note of historical signifance. It was 20 years ago at BMO we launched mbanx, which was the first online banking site.

Krebsonsecurity.com has been hit over the last couole of days with DDoS on a scale that he indicates is unprecedented. The scale is over 600Gb per second – this in comparison to previous large attacks in the 200 Gb range. Furthermore the methods used indicate botnet leveraging of applicances previously never considered. These include personal home routers, which have never changed their default username/password combinations (admin/admin etc).

The scale is such that Akamai who had previously offerred free support, have backed off that free support.

The attacks against Krebs are personal it would appear based on the detective work he has performed. The scary part is just that. By only going after him now suggests the bad actors always could and just didn’t bother until now.

The crippling distributed denial-of-service attacks started shortly after Krebs published stories stemming from the hack of a DDoS-for-hire service known as vDOS. The first article analyzed leaked data that identified some of the previously anonymous people closely tied to vDOS. It documented how they took in more than $600,000 in two years by knocking other sites offline. A few days later, Krebs ran a follow-up piece detailing the arrests of two men who allegedly ran the service. A third post in the series is here.

]]>Colin HendersonThe Tragically Hip farewell concert in Kingston brings Canada to a standstillhttps://thebankwatch.com/2016/08/20/the-tragically-hip-farewell-concert-in-kingston-brings-canada-to-a-standstill/
Sun, 21 Aug 2016 04:37:21 +0000http://thebankwatch.com/?p=5940Few outside Ontario Canada know about this. I watched as the national broadcaster CBC showed it ad free. This was up there with the <a href=”https://www.youtube.com/watch?v=2tAE2K3YT_A”>Cream farewell at the Albert Hall</a>.

I admit to not even being a Hip fan. They just were not that big in western Canada where I spent my early time. But somehow they were always there, and the music is in your bones if you lived in Canada.

Gord Downie is diagnosed with terminal brain cancer, and that does make this an actual farewell.

btw, The Hip, aka Downie lyrics, are the only band that will require access to wikipedia to know what the hell he is talking about. Brilliant !!

Canada, yes the entire country, stood still and put even the Olympics aside for a moment.

The secret rules of engagement are hard to endorse

When the appearance of conflict meets the appearance of force

But I can guarantee, there’ll be no knock on the door

I’m total pro here, that’s what I’m here for

I come from downtown, born ready for you

Armed with skill and it’s frustration, and grace, too

]]>Colin Hendersonhip_downieHong Kong-based Bitcoin exchange Bitfinex customers lose 120K BTChttps://thebankwatch.com/2016/08/03/hong-kong-based-bitcoin-exchange-bitfinex-customers-lose-120k-btc/
Wed, 03 Aug 2016 05:35:00 +0000http://thebankwatch.com/2016/08/03/hong-kong-based-bitcoin-exchange-bitfinex-customers-lose-120k-btc/Bitcoin reporting continues to be as vague as the average persons understanding of Blockchain. Nonetheless this loss will be closely followed. The last big loss was 2 years~ ago at MtGox in Japan, and that resulted in the exchange being shut down.

Following MtGox closing in bankruptcy, here are the reasons according to Wired:

But on the inside, according to some who were there, Mt. Gox was a messy combination of poor management, neglect, and raw inexperience.

So Coindesk are doing no-one any favours by attempting to deflect the Bitfinex loss with a mid article shift to a discussion about Bitcoin mining activity and that effect on Bitcoin prices. Interesting but not the point.

The issue is security of the Blockchain and why this new loss occurred, apparently related to social media, but with no details. Maybe this loss is something to do with phishing or someone using the same password across multiple sites. Whatever the cause it is important to elaborate very quickly if confidence in Blockchain activities is to be established. This quote hidden in the Coindesk article is critical.

Market observer and trader Jacob Eliosoff provided similar input, telling CoinDesk that the event had sparked a new wave of uncertainty.

“The big question will be how much was stolen and whether Bitfinex will make customers whole,” he said.

No-one loses money with online investing with their bank and there is a reason for that. Blockchain has many advantages, but confidence will always come back to the institution involved, and not the encryption methodology; this is entirely due to the human component, which is an unfortunate reality.

]]>Colin HendersonBank customers move from online banking to mobile appshttps://thebankwatch.com/2016/07/25/bank-customers-move-from-online-banking-to-mobile-apps/
Mon, 25 Jul 2016 07:48:08 +0000http://bankwatch.wordpress.com/?p=5936The ongoing demise of online banking and its replacement by mobile banking continues. These statistics overshadow the almost 50% reduction trend in branch based transactions in UK that is expected to continue significantly to 2021. They also note this is not a reflection of bank disaffection; rather it is a shift in how customers interact with Banks.

In 2015, there were 4.3 million online banking logins each day, down two per cent on the previous year, the BBA’s Way We Bank Now report shows. In contrast, banking app logins topped 11 million a day, a 50% rise on 2014 as 40,000 apps were downloaded every 24 hours.

The number of payments made using banking apps hit 347 million last year, a 54% rise. Internet banking still has the edge here, used for 417 million payments in 2015, but this was up just two per cent.

Further the EY lead notes something of particular interest

However, they also face difficulties in bringing legacy infrastructure in line with their new aspirations and creating an organisational environment that attracts top talent to achieve their aims.

]]>Colin HendersonApple Pay accepted wherever Interac Flash is accepted, despite Apple’s own messaginghttps://thebankwatch.com/2016/07/12/apple-pay-accepted-wherever-interac-despite-apples-own-messaging/
Tue, 12 Jul 2016 09:28:55 +0000http://bankwatch.wordpress.com/?p=5931I am glad it is not just me that was confused about Apple Pay in Canada and where it is accepted. Remind me not to read marketing messages and lemming blog posts again. Even the Apple page is confusing with their “Coming Soon” section, which I now assume must be referring to online Apple Pay Interac Debit (online purchases such as Foodora).

Here is the punchline; Apple Pay works everywhere Interac Flash (Tap) is accepted. I have verified this over last few days, and am delightfully surprised with the convenience and simplicity.

I do not know where the “only accepted at Tim Hortons” meme came from but lets consider that banished forever!

At LCBO today I said “credit” and pulled out my phone. The cashier said they don’t accept Apple Pay… I told him I’d used it yesterday at the same location (which I had) and he replied that management said not to accept it… it was ridiculous! Didn’t want to get into arguments I can’t win but it was an unpleasant surprise. Time to go to a different location next time.

]]>Colin HendersonmyWPEdit ImageKeshia Evans: symbol of US race problemshttps://thebankwatch.com/2016/07/11/keshia-evans-symbol-of-us-race-problems/
Tue, 12 Jul 2016 02:51:56 +0000http://thebankwatch.com/?p=5918I have no way of knowing of any backstory on this pic from earlier today, but this has turned out today to be one of those pictures that just symbolizes everything in one moment. “No words” as a good friend would say.

On Tuesday, the pound shed 2 per cent after a handful of large UK commercial property funds froze redemptions by clients, stoking concerns the fallout from last month’s vote in favour of leaving the EU was gathering pace.

The “froze redemption” link goes to this:

Investors have been barred from cashing in their assets in two more big commercial property funds amid widespread disposals of UK assets on fears that the economic fallout from last month’s vote to leave the EU was gathering pace.

Not good. Liquidity is a given in markets, and Sept 2008 looms large. The world economy came to a stop on Sept 15th 2008 when no bank would transact with another bank for bank to bank liquidity transactions. Inter Bank trust broke down that day.This is why the BoE is making extraordinary amounts of liquidity available but watch for other Central Banks to do the same.

]]>Colin Henderson2007 reprise: Could FaceBook risk becoming another AOL?https://thebankwatch.com/2016/06/29/2007-reprise-could-facebook-risk-becoming-another-aol/
Wed, 29 Jun 2016 20:52:11 +0000http://bankwatch.wordpress.com/?p=5908Here is something I wrote in 2007. (Could Facebook Risk becoming another AOL). The context was different, ok, a lot different given that is 9 years ago and I was thinking about Lending Club who were only available within FaceBook, but I believe the conclusion stands. In fact the reality that has shown the shifts over those 9 years towards an open and mobile dominated internet supports the point. No-one has the final answer, because there is no final answer.

FaceBook are chasing their tails.

Here is the thing. AOL which was the US #1 internet source at one point, lost out because its mission was to retain users within the walled garden. It is not the first time this argument has been used but consider …. AOL strategy was all about building tools within their own garden, and as early as the 1990’s they even had their own browser and their own markup language (think proprietary version of HTML). They had their own CD which let you install AOL on your computer. The AOL ‘platform’ was a CD. Platform, tools, apps; the parallels are remarkably close.

How do make a walled garden successful over the long haul? How can you make people remain within a walled garden without them being constantly bombarded by “grass is always greener” incentives that is the internet today.

The graphic below is a chart of active users on different social networks. If we dig behind the words “social network” what we are looking at his how people communicate with friends and relatives, or at least that is how the “social network” got its name. Meanwhile along the way in an effort to make money, advertising is introduced and co-incidentally people seek different models, whether simplicity, lower bandwidth, mobile friendly, ad-free, etc..

One striking aspect of the names on the graphic below is that they all have different models, different ways to engage people, and most distinctively different was to adapt to mobile. Who will be there in 2025? How will that list look in 2025?

So reading this Techcrunch story today which is one of a succession of initiatives by FaceBook to adapt to the AOL problem just makes we wonder.

]]>Colin HendersonmyWPEdit ImageChatUI and NLP as next generation interfaceshttps://thebankwatch.com/2016/06/13/chatui-and-nlp-as-next-generation-interfaces/
Mon, 13 Jun 2016 09:29:28 +0000http://bankwatch.wordpress.com/?p=5905It seems to be that time again where we are on the cusp of a shift in internet behaviours and platforms.

I have been noting themes in my reading over the past few months, and two recent pieces in particular solidified them for me. Mary Meeker report, State of the Internet that I referred to a few days ago, and several recent articles by Ben Thompson.

If we think about it, these directions are entirely rational especially #1. Over the last 10 years mobile has grown and grown with certain obvious characteristics.

– connectivity by mobile is not always perfect

– web on mobile is spotty especially with ads taking 10% of the screen

– everyone has a phone

– not everyone has a laptop or at least not handy

– the single largest use of mobile is chat – it is low bandwidth, fast, easy and simple.

So if we take the single most used method on mobile, why not make it the interface for other things such as search, shopping and banking. Here is a well explained piece on ChatUI for Banking. Watch for Apple maybe opening up iMessage to Android later today.

Siri has been around for 5 years, and not exactly getting many excited so far. Google/ Android are pressing on this UI now. However Apple have recently purchased a new company which has made express improvements in NLP with better understanding of accents (something I value) and picking out sounds despite background noise.

Enter Amazon Echo and they may have caught everyone by surprise with the Echo. Integrated hardware, speaker, powerful NLP and which has the power of Amazon.com suggests they are on to a winner. It may be a stretch to suggest that Echo killed the Google Nest strategy, but it has to be fair to say the Nest strategy has now been refined to the “Home” strategy, and Amazon Echo success must take some significant credit here. Echo makes a point of differentiating between voices in the home and learning over time. The power of Amazon cloud comes to bear here; once Echo is in the home, that home is now part of the Amazon cloud and both can learn from that. Something that held up Siri is that vehicle use is the only practical one so far. Introduction of Home as a user platform takes voice to a whole new level.

Lastly the drive by large tech towards AI will support both these interfaces, and in fact is a requirement for complete success.

Relevance to Bankwatch:

Watch for Chat and Natural Voice Processing as a user interface that will become prevalent and I would predict will overtake web browsing as the primary access to internet over next 2 – 3 years.
]]>Colin HendersonMary Meeker annual State of the Internethttps://thebankwatch.com/2016/06/07/mary-meeker-annual-state-of-the-internet/
Tue, 07 Jun 2016 23:41:45 +0000http://bankwatch.wordpress.com/?p=5903The Mary Meeker annual report is always fascinating and full of facts for the wonks amongst us.

This particular slide pasted below from the 2016 report is one of the better I have seen at quickly summarizing the large generations and their value differences; in particular the financial view of the world which is very different between Boomers and Millennials.

]]>Colin HendersonmyWPEdit ImageMove 37 | Implications for progress on Artificial Intelligencehttps://thebankwatch.com/2016/05/23/move-37-implications-for-progress-on-artificial-intelligence/
Mon, 23 May 2016 14:23:01 +0000http://bankwatch.wordpress.com/?p=5898I watch and listed to Google I/O today. The stuff about the new communications app Allo and new emojis was a bit underwhelming but I sensed a deliberate shift under the guidance of SEO Pinchai towards commercialization with the likes of Google Home coming this year. This is going right after the Amazon Echo market, no doubt with a view to address and expand upon the earlier narrow view exemplified by the Nest purchase.

But one comment from Pinchai on “Move 37” came closer towards the end of I/O struck me as prescient with regard to Artificial Intelligence (AI) and that hooked me.

If you want to now more about the status and implication of AI, I recommend this two piece analysis at waitbutwhy. Tim Urban explains very clearly AI using a three level model. If you have any interest in AI, this is a must read. It is neither scary nor technical. It simply and carefully (for our human brains) explains the inevitability and implication of AI:

Artificial Narrow Intelligence (ANI): Sometimes referred to as Weak AI, Artificial Narrow Intelligence is AI that specializes in one area. There’s AI that can beat the world chess champion in chess, but that’s the only thing it does. Ask it to figure out a better way to store data on a hard drive, and it’ll look at you blankly.

AI Caliber 2) Artificial General Intelligence (AGI): Sometimes referred to as Strong AI, or Human-Level AI, Artificial General Intelligence refers to a computer that is as smart as a human across the board—a machine that can perform any intellectual task that a human being can. Creating AGI is a much harder task than creating ANI, and we’re yet to do it.

…..

AI Caliber 3) Artificial Superintelligence (ASI): Oxford philosopher and leading AI thinker Nick Bostrom defines superintelligence as “an intellect that is much smarter than the best human brains in practically every field, including scientific creativity, general wisdom and social skills.” Artificial Superintelligence ranges from a computer that’s just a little smarter than a human to one that’s trillions of times smarter—across the board.

…..

Let us return to Pinchai’s reference to

Move 37.

I had followed the AlphaGo vs Lee Sedol Go match series in which AlphaGo won 3 of 4 games. Go is generally accepted as the most complex board game with so many alternative moves as to be almost unlimited. Unlike chess it is not possible to program a series of moves and responses.

During Game 2, AlphaGo made a move at Move 37, that left all the observing experts aghast. So much so that Lee spent 15 minutes considering how to respond.

Move 37 was a move that no human would have considered. It turns out in this analysis at Wired, that AlphaGo had uncovered a move that no human would have considered because it had a 1/ 10,000 likelihood of being deployed, yet AlphaGo realized Move 37 had a high change of success.

It seems to me that in the Urban model AlphaGo may have jumped right over Level 2 AGI (which is yet to be created) and straight to level 3 ASI.

Following the game, in the control room, Silver could revisit the precise calculations AlphaGo made in choosing Move 37. Drawing on its extensive training with millions upon millions of human moves, the machine actually calculates the probability that a human will make a particular play in the midst of a game. “That’s how it guides the moves it considers,” Silver says. For Move 37, the probability was one in ten thousand. In other words, AlphaGo knew this was not a move that a professional Go player would make.

But, drawing on all its other training with millions of moves generated by games with itself, it came to view Move 37 in a different way. It came to realize that, although no professional would play it, the move would likely prove quite successful. “It discovered this for itself,” Silver says, “through its own process of introspection and analysis.”

Is introspection the right word? You can be the judge. But Fan Hui was right. The move was inhuman. But it was also beautiful.

]]>Colin HendersonApple Pay at Tim Hortons in Canadahttps://thebankwatch.com/2016/05/18/apple-pay-at-tim-hortons-in-canada/
Wed, 18 May 2016 13:01:30 +0000http://bankwatch.wordpress.com/?p=5894I just made my first Apple Pay transaction at Tim Hortons in Toronto. Very smooth – double press the home button on your locked phone. This has the double effect of unlocking the iPhone, and activating Passbook. Then simply hold over the merchant device to pay.

Despite the naysayers, it is actually easier than debit card tap to pay, because the phone is usually more accessible than debit card, and the activation levers the finger print authentication.

Now we just need more merchants in Canada to accept Apple Pay.

]]>Colin HendersonRBC and CIBC add debit and credit cards to Apple Wallet in Canadahttps://thebankwatch.com/2016/05/10/rbc-and-cibc-add-debit-and-credit-cards-to-apple-wallet-in-canada/
Tue, 10 May 2016 21:24:21 +0000http://bankwatch.wordpress.com/?p=5890I was pleasantly surprised after a long wait to see RBC add debit and credit card functionality to Apply Pay today. I had lost touch with the Big 5 Canadian Banks efforts to develop a co-ordinated front on Apple Pay but I see now that they must have agreed on something. They are deploying on their own schedules with RBC and CIBC out first.

And here is my Apple Wallet that I had almost given up on for Canada. Now I have to go and buy a Tim Hortons coffee tomorrow. Hopefully the merchant sign up will get into a different gear now.

]]>Colin HendersonmyWPEdit ImageP2P Lending is in troublehttps://thebankwatch.com/2016/05/04/p2p-lending-is-in-trouble/
Wed, 04 May 2016 23:15:34 +0000http://bankwatch.wordpress.com/?p=5885P2P Lending held out as a great opportunity to disrupt banking … back in 2006. I was with CommunityLend then, and the opportunity seemed endless. Since then the Canadian regulation stopped P2P lending in Canada.

Meanwhile in the rest of the world the market moved from P2P to “Institutional Lender”2P. Now the Institutional Lender market seems to have dried up. The fact that Lending Club, the most successful P2P lender is increasing their rates in order to attract lenders has a sense of desparation.

With Citi recently deciding to stop buying debt from Prosper, the online lender is cutting its workforce by 28%, shutting its office in Utah and slashing jobs in San Francisco and Phoenix, affecting 171 people, according to Bloomberg.

The firm’s CEO, Aaron Vermut, who is reportedly not taking his salary this year, told Bloomberg: “Over the past year we invested for growth, but with the recent tightening of the capital markets we are refocusing on our core consumer loans business and building more resiliency into the company.”

Rival OnDeck Capital is having similar problems. This week it reported that first quarter losses have more than doubled to $13.14 million, sending its stock price plummeting by a third.

The poor numbers are related to an inability to sell off the loans it makes to third parties. In Q1, just 26% of loans were sold to investors, down from 40% in the previous quarter, while the price received for loans also fell.

…..

Next up is Lending Club, which reports first quarter results next week. The firm has seen its share price fall by more than a third so far this year, taking another hit this week as news of its rivals’ travails made the news. Last month it said that it would raise rates on loans in an effort to attract investors – the third time it has done this in six months.

Capgemini and Efma today released the findings of their annual World Retail Banking Report (WRBR) 2016. The report reveals that fintech providers are making increasingly significant inroads with customers – two thirds of customers are now using fintech products or services – yet banks are struggling to keep pace, with the vast majority admitting they are not adequately prepared to manage this threat.

Key findings include:

* Not only are a majority of customers now using FinTech products or services, they are also much more likely to refer friends and family to their FinTech provider (55 percent) than to their bank (38 percent)

* 96 percent of banking executives agree that the industry is evolving toward a digital banking ecosystem, where Fintech providers play a much bigger role, but only 13 percent say they have the systems in place to support it

* Fintech providers are perceived among consumers as easy to use (82 percent), offering fast service (81 percent), and providing a good user experience (80 percent)

* While banks improved their customer experience performance, this did not translate into tangible results in profitable customer behavior, with only 16 percent of customers, saying they are likely to purchase an additional product from their bank

* Bank executives favor partnership with fintech firms through collaboration (46 percent) and investment (44 percent) as they look for ways to respond to the threat posed by these emerging competitors

So far, India’s attempt to assign every citizen a unique 12-digit number associated with a person’s unique iris, fingerprint or facial features, is succeeding—just last week, Aadhaar reached its milestone of registering 1 billion people. With more than 80 percent of Indians enrolled, it gives the payments system a solid base to build on.

The Bloomberg article goes on to note that the UPI will bring capabilities similar to M-Pesa in Kenya which means new companies can offer low cost banking and money transfer to millions who have never even had a regular bank account, due to availability and cost. It references one such offer coming from Khosla:

Vinod Khosla, billionaire investor and co-founder of Sun Microsystems. His Bangalore-based incubator Khosla Labs is backing an Indian startup called Novopay, which offers mobile banking at 44,000 kiranas, or neighborhood convenience stores, in the country.

What I and many find interesting is that while the motivation for these initiatives is to bring banking to the unbanked, the methodology and consumer costs involved would be a very attractive proposition to many in the west who are very ‘banked’.

]]>Colin HendersonExperimenting with myWPEdithttps://thebankwatch.com/2016/04/16/experimenting-with-mywpedit/
Sat, 16 Apr 2016 19:02:09 +0000http://bankwatch.wordpress.com/?p=5879I have tried various blog posting apps for OSX with most being quite hopeless to date. Windows bog posting apps are streets ahead. I haven’t had time recently to research more.

However today I came across this one which seems to address all the requirements, even though the interface is at best average. It does tick all the boxes in terms of formatting, images, and general typing with headings and the likes.

]]>Colin Henderson“TD Bank Launches Real-time Money Management App” – Techvibeshttps://thebankwatch.com/2016/04/16/td-bank-launches-real-time-money-management-app-techvibes/
Sat, 16 Apr 2016 18:52:16 +0000http://bankwatch.wordpress.com/?p=5877TD have rolled out the result of their partnership with Moven. The reference to a “first in Canadian Banking” is a bit of a stretch given spending analysis capabilities that BMO and RBC have, unless the ‘first’ refers to deployment as an app.

TD Bank today announced it has begun its roll-out of TD MySpend, a new real-time money management app – a first in Canadian digital banking.

A companion to the TD app for iPhone or Android, TD MySpend makes it easier for customers to track their spending habits from their eligible TD bank accounts and TD credit card accounts with instant notifications on how and where they’re spending their money.

The TD MySpend app is a result of an exclusive partnership with Movencorp.

]]>https://thebankwatch.com/2016/03/07/ray-tomlinson-inventor-of-email-died-today/feed/1Colin HendersonSIBOS: What is Banks’ role in identityhttps://thebankwatch.com/2015/10/13/sibos-what-is-banks-role-in-identity/
https://thebankwatch.com/2015/10/13/sibos-what-is-banks-role-in-identity/#commentsWed, 14 Oct 2015 04:08:25 +0000http://thebankwatch.com/?p=5867SIBOS is an interesting meeting each year where the lemmings look for the cliff to race off to. I don’t say that with animosity but with reality where we have several thousand largely paid employees who are tired of the daily payment grind, and looking for clarity on whats next.

So when the senior folks at banks start talking about identity as a service one has to yawn. I recall discussions and analysis about this potential service in 1998 in Chicago while I was at mbanx. The obvious analogy between the bank vault containing cash and a vault containing your identity is strong but not yet conclusive for banks almost 20 years later.

Fayyed and other panellists, including Sean Gilchrist, managing director, commercial digital from Lloyds Bank, identified established social networks and technology vendors as the most probable sources of competition. The spectre of the threat from Apple, Facebook and Google was inevitably raised.

The concept of identity is deeply embedded in technology and standards such as OAuth and cloud to name only two. Banks are so far from this work in where they have been focussed for the last 20 years of internet so I just dont see it.

I would go further and suggest the vault which is embedded in each branch is the wrong model for identity. Identity is focussed on several diverse components (drivers license, social security, credit cards, loans, mortgages, land registry, etc) all of which are external to the bank. Banks don’t issue identity. Identity is not a physical thing to be deposited into a vault.

Banks are users of identity, not issuers nor keepers of identity. This horse has left the barn.

]]>https://thebankwatch.com/2015/10/13/sibos-what-is-banks-role-in-identity/feed/4Colin HendersonRackspace shift to managed services supporting Amazonhttps://thebankwatch.com/2015/10/07/rackspace-shift-to-managed-services-supporting-amazon/
Thu, 08 Oct 2015 00:12:35 +0000http://thebankwatch.com/?p=5865This is an big development in the cloud space that portends the obvious; Amazon have the cloud space well cornered. Microsoft (Azure/ Live/ OneDrive/ latest nom de jour – I have seriously lost track on their latest name) are giving it a shot but the retail/ B2B/ new corporate cloud space is owned by Amazon – full stop.

Here is the newsletter in full from Robert Scoble, Rackspace and internet evangelist.

Regarding Microsoft, we’ve been one of their biggest partners for years, and we see Microsoft as a huge player in the cloud ecosystem. If you haven’t noticed, Microsoft has something like a dozen billion-dollar businesses (or larger) and most of those are in the Enterprise.

If you think our partnership with AWS is a “take all our resources and bet it on one horse” kind of race, you are mistaken, and you’re missing what we’re really up to.

So what’s Rackspace up to Scoble?

Rackspace wants to be the service leader in the cloud market. And the market has evolved into a multi-cloud world. How can we provide the best service if we are only pushing one cloud (whether that’s OpenStack or Azure or AWS)? That’s not Fanatical Support.

What is?

Taking the customer’s side. Customers don’t want to be pushed to one cloud or another.

I don’t want to be treated like that either. I want someone to sit down and authoritatively explain to me what the advantages are of putting my business on one cloud or another.

For some, that will be AWS. For others, it might be OpenStack, and for others still, it might be Microsoft Azure. There are a lot of businesses that might need to be on two of these clouds at the same time too.

Which is why I explained in my Facebook post this morning that Rackspace is now the Switzerland of clouds.

So this is big news for us at Rackspace, as we truly embrace this new multi-cloud world.

You can read the press release for the particulars about what Rackspace and Amazon are doing together and I’ll link to the best news reports I’ve seen below.

In short, we made a deal to provide Fanatical Support for AWS plus three additional beta offerings, Managed Security for AWS, Compliance Assistance for AWS and Managed Cloud for Adobe Experience Manager (which runs on AWS).

What I’m here for is to explain the why.

For that you have to go way back to 2010 when I first saw Flipboard. I saw it months before it was released and knew it would be a really amazing company. I turned to Founder/CEO Mike McCue and asked him, “What cloud are you using?” (Even by then in Silicon Valley nearly every startup had decided to use cloud, rather than hosting their own infrastructure in a cage somewhere).

He gave an answer I had already heard many times before and since: AWS.Since then though, the cloud space has gotten a lot more competitive.

Microsoft Azure and Google’s App Engine both came along from companies with deep pockets. They are pouring billions into their cloud offerings. At Rackspace, we gifted OpenStack to the open source world and it’s taken off, with companies from Comcast to Nike using it to run their businesses.

The world of cloud has gotten flatter and more complex; even if you just stay on AWS you’ll see that it has hundreds of APIs, many of which have been added in just the past few years.

Because of that, the press has tried to portray the current landscape as a full-blown war over cloud. Innovative businesses from Uber to Instagram have bet on it and bet big. Plus, most enterprises are now hosting on cloud, or at a minimum, cloud technology hosted in their own datacenters.

Yeah, it’s easy for the highly technical folks that start new companies. But let’s be honest. If you know how to build and scale a new service like Uber, and those skills could be used at a pre-IPO startup, why would you want to work for, say, a pizza chain?

Isn’t your local mom and pop pizza chain being asked to build the same kind of apps and systems that Uber has built?

Not to mention, there are a lot of businesses that don’t know how to deal with being on say, Shark Tank, or, for the bigger businesses, keeping their online or ecommerce platforms up and running during a huge peak in traffic because of a Super Bowl commercial. Getting on Shark Tank can bring a 5,000 percent increase in traffic and if you haven’t built your system properly, it can be tough slugging through the busiest and most important day of your company’s life.

Heck, I was hanging out with the guy who runs Coachella’s music festival (200,000 attendees), Gopi Sangha. After I interviewed him, he told me he couldn’t get through to his cloud provider on the festival’s busiest day of the year — they weren’t answering their phones and it forced him to deal with a slow ticketing system.

The day when all of his customers were registering their armbands and loading its app up with the latest schedule, his business was down.

When you say Fanatical Support, most people don’t recognize what that means, unless they’ve experienced it, or they’ve experienced the lack thereof, like the chief geek at Coachella.

For companies, Fanatical Support means they have a partner with the expertise to help them manage their infrastructure and apps, so they can focus on their core value proposition — and possibly even save money because they need fewer highly skilled technical staff on their payrolls.

It also means that they have an accountable partner (one neck to wring!) who can help them prepare for, and execute systems that will deal with the business demands they are seeing. Those could be sensor workloads from IoT devices or millions of new customers that will pop up on a concert tour in one of the new “smart stadiums,” like Levi’s Stadium in Santa Clara, which will host the Super Bowl (it runs on AWS by the way).

Why go with Rackspace support over AWS support?

Simply put, support and managed services are different. This is why Amazon has a Managed Service Partner program. While we do support the AWS platform as part of our offers, we go beyond that with managed services that speak to how customers should design for and operate applications on AWS.

These opinions are reflected in our tooling, automation and templates for Navigator (one of our available AWS service levels). In our Aviator service level, we operate and manage customer application environments, which go beyond AWS infrastructure support and into in-guest/instance support.

For example, we provide SysAdmin/DevOps expertise to do GuestOS support — logging into servers, configuring, making changes, patching, etc. (i.e., day-to-day operational management with an army of technologists that operate on a 24/7 basis).

We are a managed service provider at our core; it’s who we are. Rackspace has a 16-year heritage of working with businesses to help them make applications more effective and efficient to operate, and we’re the trusted service partners for more than 300,000 customers across 120 countries.

This is why I’m so excited to be part of the 6,000+ employees who are working with Amazon and its CTO Werner Vogels to provide better support to the world that wants to use AWS as its business infrastructure.

Now, can we talk?

That’s all sweet and stuff, but this is just part of the new Rackspace strategy, which is to provide Fanatical Support for a variety of clouds your business might need.

So as I said, we really are the Switzerland of clouds. We’ll support you in the best place that makes the most sense for your business. And in some cases, we’ll recommend different clouds for different parts of your business and support them all.

This is why I’m such a good fit for Rackspace and why I haven’t left to join some startup or head to Alphabet or some other company. Rackspace is uniquely positioned to provide this support. It maps perfectly with my interest in where the future is headed. IoT? Rackspace supports it. Contextual apps? Rackspace supports those. Enterprise workflows? Rackspace supports those too. Robot operating systems? Rackspace will be there.

Why?

For years, Rackspace has hired employees with strengths in people skills. Rackers, as we choose to call ourselves, are curious, we listen and we’re highly technical.

Walk through one of our buildings in London, Hong Kong, Mexico City, Austin, Sydney or our 1.2 million-square-foot home in San Antonio and you’ll find thousands of geeks who keep the Internet running for 300,000 customers.Many of these employees have gone “back to school” over the past couple of years to learn AWS deeply.

To wrap it up, we’d love to be your business partner. Let’s talk! You can find me at scoble@rackspace.com

]]>Colin HendersonWhy do we need cash?https://thebankwatch.com/2015/10/06/why-do-we-need-cash/
https://thebankwatch.com/2015/10/06/why-do-we-need-cash/#commentsWed, 07 Oct 2015 02:29:20 +0000http://thebankwatch.com/?p=5861Just in case you thought the world financial system was rational, then in fact you are correct. Rational thought for protection of the world financial system during the next crisis is to eliminate the problem caused by cash. Now this might seem an extreme view of the world, but lets not forget Andy Haldane of the Bank of England proposed elimination of cash just last month.

The financial system is predominantly comprised of digital money. Actual physical Dollars bills and coins only amount to $1.36 trillion. This is only a little over 10% of the $10 trillion sitting in bank accounts. And it’s a tiny fraction of the $20 trillion in stocks, $38 trillion in bonds and $58 trillion in credit instruments floating around the system.

Suffice to say, if a significant percentage of people ever actually moved their money into physical cash, it could very quickly become a systemic problem.

Indeed, this is precisely what caused the 2008 meltdown, when nearly 24% of the assets in Money Market funds were liquidated in the course of four weeks. The ensuing liquidity crush nearly imploded the system.

Of course these are quite extreme views but looking 50 years out say, then this extreme view suggests elimination of cash may not just be a convenience but a necessity to keep the world afloat. The theory goes that with no cash we would eliminate the natural fiscal suffocation that comes with the drive to cash in times of crisis.

I wonder if the opposite is not true and that cash may jest be the thing that keeps pulling us back to the centre and some semblance of stability.

first panel was very focussed on the regulatory environment, and was very focussed on the problems that fintech has with regulators. There was a thread of unbanked and underserved. In general this panel struck me as close to lobbyists

Sarah Gordon CFSI

Carol Caruso Accion (funded by Gates Foundation)

Grant Fondo – Goodwin Proctor (security / cybercrime)

Jo Lang (ny) R3CV – crytocurrency, org with 9 global banks

Sarah Martin, Moneythink – economic health of US people one at a time

the next panel was 4 actual fintech companies, and these are driving real change. What struck me with them, is that they are providing a customer friendly technology front end that is layered on top of old banking technology. They are each driven by partnerships with existing players.

Some personal and final payments takeaways from todays unconference in Toronto:

Canada is Canadian – conservative and sees the status quo as a barrier to change

Common agreement that what is needed is real time and cheap payments (P2P, P2B, B2B)

How and why this should happen gets fuzzy for most

Canada has the potential to be world leading edge in payments given:

shared national infrastructure (CPA, Interac, national P2P system)

the postive has the corollary of a shared infrastructure owned by those with least to gain from change (big 5 banks)

postitive regulatory environment looking for a greater pro-consumer approach from financial services; note a member of the Government Privacy Department (PPIDA) was present with a mandate to understand whats holding us back

old infrastructure (in payments)

banking and payments are emotional in nature (@heathervescent)

Bitcoin and blockchain is about technology but it brings out a certain mindset and set of beliefs in transparency and enablement

No real sense that there is a burning platform for big 5 banks to change anything without some intervention

Dave comes up with the darndest examples to make his point and these are frequently brilliant.

This from Modern Mechanics, August 1931 was a new concept – a glass bank. Apparently in the 1930’s bank robberies were a serious problem. Architect Keally developed the concept of a glass bank. The idea was that if everyone could see inside the bank, no-one would rob it. Keally was in fact referring to the concept of transparency hence we flowed nicely into a Blockchain discussion.